Reid Denies Role in Attempt to Block Federal Investigation

Michael Warren

January 14, 2013 3:26 PM

Utah businessman Jeremy Johnson, who pled guilty last week to charges of bank fraud and money laundering, is claiming he made a deal in 2010 to pay Senate Democratic leader Harry Reid of Nevada $600,000 to stop a federal investigation into Johnson's business. Johnson says his alleged deal with Reid was brokered by John Swallow, a Republican who was sworn in as Utah's attorney general on January 7, and a fellow businessman from Utah, Richard Rawle.

Swallow has denied that he is involved in the deal, in which Rawle would have allegedly used his influence to get Reid to intervene on Johnson's behalf in a Federal Trade Commission investigation into Johnson's Internet marketing company. Johnson says he demanded his initial payment back when the federal investigation began unabated.

Reid, who was silent when reports first surfaced late last week, has denied his involvement in and knowledge of Johnson's allegations through a spokesman. The Salt Lake Tribune reports:

"Senator Reid has no knowledge or involvement regarding Mr. Johnson’s case," his spokeswoman, Kristen Orthman, said in a statement. "These unsubstantiated allegations implying Senator Reid’s involvement are nothing more than innuendo and simply not true."

Reid’s denial marks the first time that his office has responded to Johnson’s accusations since the St. George businessman alleged that Utah’s new attorney general, John Swallow, helped set up a $600,000 payment, intended to enlist Reid to thwart a Federal Trade Commission investigation into Johnson’s I Works company.

Swallow has adamantly denied playing a role in any such arrangement and said he merely put Johnson in contact with Richard Rawle, the late owner of the Provo-based Check City payday-loan chain. Rawle agreed to hire lobbyists to weigh in with the FTC, Rawle said in an affidavit before his death.

Reid has been involved with federal investigations and briberies before, though in a different capacity than what Johnsons has alleged. Here's an excerpt from my story in this week's WEEKLY STANDARD:

That taste for brawling has characterized Reid’s long career in Democratic politics since his first election, in 1968, to the Nevada state assembly. Gubernatorial candidate Mike O’Callaghan​—​also his high school teacher, boxing coach, and mentor​—​chose Reid to run on the ticket for lieutenant governor in 1970. Reid served nearly four years as lieutenant governor before losing two subsequent elections: one for Senate, to Republican Paul Laxalt, and another for Las Vegas mayor. But Reid made a name for himself as chairman of the Nevada Gaming Commission in the late 1970s. In 1978, a crooked businessman named Jack Gordon (who later married La Toya Jackson) tried to bribe Reid to approve licenses for two new types of casino game. After alerting the FBI, Reid set up a meeting in his office with Gordon and his business partner as a sting. When Gordon produced the money for the bribe, the federal agents burst into the office to make the arrest. Here’s how Reid described the episode in his book:

The agents rushed in, and then I lost my temper. How could they think they could do this to me? I was so angry that I went at Jack Gordon. “You son of a bitch, you tried to bribe me!” I lunged and got him in a choke hold. I was in a rage. The FBI agents had to pull me off of Gordon. And then it was over.